Israeli Prime Minister Benjamin Netanyahu has given approval for the sale of hundreds of new settler homes still to be built occupied East Jerusalem, lifting a freeze on their construction in place since 2013.

Israeli officials told AFP on Monday that Netanyahu had authorised putting 436 housing units in the illegal settlement of Ramat Shlomo in northern East Jerusalem and 18 homes in nearby settlement Ramot. The homes in the ultra orthodox Jewish neighbourhood, Ramat Shlomo, were among 1,500 homes first announced in 2010 during a visit by US Vice President Joe Biden to Israel.

The announcement caused a diplomatic rift between the US and Israel, and Netanyahu later froze the housing project in a bid to lower tensions. However, in May this year 900 units were re-approved after a new intersection providing access to the neighbourhood was opened.

The number of Israeli settlers West Bank and East Jerusalem now exceeds 500,000. The settlements are considered illegal under international law, and have been condemned by the United Nations, the European Union and the US.

According to Israeli rights group B'Tselem, the settlements have resulted "in the violation of the rights of Palestinians as enshrined in international human rights law." B'Tselem added: "Among other violations, the settlements infringe the right to self-determination, equality, property, an adequate standard of living, and freedom of movement."